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Franchisee to Franchisor: What it Takes to Make the Transition
Franchising World, February 2007
While making the transition from a franchisee to a franchisor may be a huge step, it is an exciting new field of business. By Rob Caswick How long will it take to set it all up? Do I have a strong and unique enough concept? Can it withstand the test of time? Will I be able to replicate my small business success for every unit in the system and provide a strong support network? Setting up a franchise system can be a daunting task. Many entrepreneurs have gone back and forth between their decision to stay a small business or take the concept to the next level. The anxieties and adrenaline rush that come with starting a franchise organization are valid and often overwhelming. Some of the factors that help make the move from being a franchisee to taking on a leadership role within a franchise system include a change in mindset, developing a strong and consistent business model, planning and staying ahead of the game and building a strong relationship with the franchisees. Lastly, but certainly not least: taking that leap of faith. When it is right to take the next step? How is the transition made? When does one know he or she is ready? In the following paragraphs, are some of the most important lessons I’ve gathered as a franchisee that helped me successfully transition to a franchisor.
Leverage Your Experience As a Franchisee As the founder and franchisor of Artuzzi’s Italian Kitchen, a new fast-causal concept operating in a quick service restaurant segment, my background helps me to relate and address the concerns of my current franchisees in the most effective and efficient way. The previous training received as a franchisee often provides franchise systems with the insight on how to best build a solid network that thrives on relationships. Walking in the shoes of a franchisee and living through their struggles definitely presents budding franchise companies with a unique understanding of what it takes to run an operation smoothly and successfully. It offers the intellectual capital edge and a definite advantage over other new franchise organizations.
Change in Mindset, Essential Skill Set Be a Coach. Along with having the entrepreneurial spirit that enables one to take chances, a successful franchisor needs to have the mentality of a coach and the psychology of teacher. As a franchisor, one needs to fulfill the role of a mentor where not only does one have a model that works, but has to loan that model to others and teach them the ways to run it successfully. Prepare for Added Responsibility. Franchisors need to prepare themselves for additional responsibilities that go along with managing an entire network of franchisees. As the head of a franchise organization, it is your responsibility to not only grow the system, but also provide the essential tools required to sustain the network and assist franchisees in their day-to-day operations. This means shouldering an operational, as well as moral responsibility. Think Big. New franchisors also need to train their minds to consciously focus on the “bigger picture.” As a franchisee, the efforts and decisions are primarily centered on a single store or unit. As a franchisor, one needs to start thinking of the system as a whole. Every decision made or policy implemented now has implications for the entire system. This requires franchisors to be detail-oriented, meticulous and highly-organized, as well as provokes them to stay abreast of trends and make necessary modifications to the system.
Is Your Business Ready to be Franchised? • Build the Concept. Pay careful attention to the concept that drove the decision to take on the new franchisor role. The concept is at the center of the franchise system and uniqueness is a pre-requisite for a “franchiseable” concept. However, it also needs to be profitable and one that has sufficient market demand. The concept must be carefully chosen, developed and be able to operate in a market where growth can be sustained. The world’s more successful franchise concepts are often some of the most recognized brands. Adhering to these guidelines helps to develop a concept that can be differentiated from the clutter and can act as a franchisee magnet attracting quality prospects. • Create a Business Plan. Secondly, and probably one of the most important aspects of developing any franchising program, is the creation of a business plan. The business plan needs to be a comprehensive document which outlines the concept, business model, franchise operations, marketing functions and finances of the organization. The plan must also chart out a chosen path of growth–rapid expansion vs. steady growth, franchise right from the start or begin with corporate stores–and include growth projections for the next one, three, five and 10 years, if possible. • Develop the Franchisee Profile. A franchisor also needs to determine and draw up a franchisee profile to determine what type of person would be best suited to run a local store, what qualifications are required, what prior experience is necessary. This will enable a franchisor to bring like-minded individuals that share the same vision for the concept together. A franchisor has to be selective in awarding franchises to ensure the successful growth of the organization. Above all, a franchisor needs to believe in the concept wholeheartedly and prove that it is a solid business model which can be successfully repeated and will yield results time and again. This conviction is what will ultimately trickle down to franchisees across the system and attract new prospects, which in turn will grow the organization.
Setting Up the System • Set Operational Guidelines. Establishing clear procedures and techniques is one of the first things that a franchise system needs to set up. This requires careful documentation of every step involved for the successful execution and implementation of a business. This is intended to not only help franchisees maintain consistency across the system, but maintain the integrity of the brand. • Creating an operations and procedures manual, drawing up a franchise agreement that outlines the details of the franchise including fees, support and training provided and developing the disclosure document including the UFOC are all part of setting up a solid infrastructure for your upcoming organization. While all this may seem cumbersome, as a franchise company is responsible for providing a proven, time-tested model with appropriate tools that will help franchisees duplicate the accomplishments achieved at corporate stores within their local markets down to the very last detail, including how customers are greeted at the door. • The old Italian proverb of “Live well, laugh often, love much” is applied here and the system has ensured that this translates across all aspects of its operations. It defines the culture behind the concept from the menu and ingredients to construction and décor. One of my most important lessons learned as a franchisee was that of consistency. Customers must always have a consistent experience no matter which location they frequently visit. • Define Legal Boundaries. A franchisor also needs to fulfill all of the legal obligations required in setting up the company. One may have experienced this when purchasing a franchise, but as a franchisor one needs to adhere to state, federal and franchising laws. It would be best for franchise companies to obtain outside legal counsel with experts in the field of franchising, including a trademark attorney, to make sure all necessary legalities are in place.
Marketing Take time to think of how the concept should be presented and perceived by the end customer. Make sure that the vision and values for the brand are shared across the system and resonate with the entire franchise network. Writing up a marketing plan for the organization and creating a handbook for franchisees will go a long way in maintaining the integrity of the brand. It also provides more control over the brand. At our company, a comprehensive marketing handbook was developed that provides new franchisees with step-by-step guidelines on how to create awareness for the store in their local communities and offers a set of time-tested tactics that can be implemented at a local store level. While making the transition from a franchisee to a franchisor may be a huge step, it is an exciting new field of business. The new role as a franchisor allows for quicker expansion, but it is imperative that the right steps are taken first to ensure the organization’s success. A franchisor’s role never ends because he or she must continuously observe and tweak the operations to ensure success of the entire system. Ultimately, the excitement shared with every new franchisee opening is not only reminiscent of your own beginnings, but is an extremely rewarding experience. Rob Caswick is co-founder of Atlanta-based Artuzzi’s Italian Kitchen. He can be reached at rcaswick@artuzzis.com.
Let your background as a franchisee be your guide. Don’t shy away from that experience, but embrace it and use it to develop a better system. The knowledge I gathered as a prior restaurant franchisee helped me understand the day-to-day operations of a franchise unit, the challenges faced by a new franchisee and the local marketing techniques that would work. Some of the most fundamental lessons–consistency and marketing–are developed at this stage.
Possibly, the most significant change made while making the transition from a franchisee to a franchisor is a change in mindset.
Once one has decided to take the leap of faith, it’s time to have certain basic fundamentals in place:
Franchising is the art of controlled duplication. Without the necessary systems in place, this cannot be implemented effectively.
Marketing the concept is among the final stages of getting the business ready to be franchised. Use those experiences as a franchisee to leverage the local marketing techniques implemented and apply them at a larger scale. Remember however, that one is no longer restricted to the local market, but is required to generate awareness for the concept as a whole. As a franchisor, one needs to think of the concept in its entirety to effectively position the franchise system in the market.
